The fact that a contract is one of adhesion does not mean that either it or any of its terms are invalid or unenforceable. A court will, to be sure, look at the contract and its terms with some special care. As in most cases, it will refuse to enforce terms that it finds unconscionable and will construe ambiguities against the draftsman; but it will not simply excise or ignore terms merely because, in the given case, they may operate to the perceived detriment of the weaker party.
Policy holders had purchased a fire insurance policy from an insurance carrier. After a fire occurred at the policy holders' home, and the policy holders and the insurance carrier could not agree on the amount of loss, the insurance carrier invoked the policy's appraisal provision. The policy holders countered by filing a suit for damages against the insurance carrier. On a motion by the insurance carrier, the trial court dismissed the policy holders' suit for failure to state a claim upon which relief could be granted.
Does the judicial enforcement of an insurance policy’s appraisal provision deprive the policy holders of their constitutional right to a trial by jury?
The court held that although all insurance policies are contracts of adhesion, that fact alone does not make an appraisal provision unconscionable. Moreover, the court ruled that judicial enforcement of an appraisal provision that makes an appraisal, if invoked by the insurer, a condition precedent to a suit by the policy holders, is not an unconstitutional deprivation of the right to trial by jury. Accordingly, the court concluded that the appraisal provision in this case was not invalid, and that the procedure required by it must be used in good faith.